In this episode, I'm joined by author and YouTuber Academic Agent to talk about his new book, 'Populous Delusion' and his views on the current state of the free market in the 21st century. It's a great episode, and I hope you enjoy it!
00:01:25.100Hey, everybody. How's it going? Thanks for joining me this afternoon. Got a great stream with a great guest. I think you're really going to enjoy.
00:01:38.960We're going to be talking about a topic that I think for a lot of people is really near and dear to kind of their political ideology and the way that they understand the world.
00:01:48.380But my buddy Academic Agent has been talking about this a lot recently, and he's someone who's incredibly knowledgeable in the area.
00:01:54.620So I wanted to bring him on. He's a YouTuber. He's an author. Just had his book Populous Delusion to come out last year.
00:02:02.120It's excellent. You should check that out. Academic Agent, thanks for coming on, man.
00:02:06.980Yeah, thanks for having me, Auron. And I feel very trendy with your cool outrun intro.
00:02:14.440You know, I'm not as cool as Auron, as you'll find out very quickly.
00:02:19.920We're on the bleeding edge over here of culture.
00:02:23.240I just wanted to say, you know, for those people who don't know me, a little bit about my, I guess, background before coming to my current views.
00:02:36.500And, you know, I was, broadly speaking, on the free market end of things.
00:02:43.880I, not yet, I mean, you know, I went to the Mises Institute.
00:02:48.640You know, I took part in the, I had various scholarships.
00:02:51.960I got two FA Hayek Awards and wrote a book called The Defenders of Liberty, essentially defending the free market back in, it was a couple of years ago now.
00:03:06.520I think it came out in 2020, that book, but I wrote it a couple of years before that.
00:03:11.140There's usually a lag with these things.
00:03:12.280So, the reason I'm putting that up front is because when you present these sort of arguments, in my experience, some people who are libertarians will accuse you of kind of not knowing the material.
00:03:28.200You know, I've read all of Human Action.
00:03:31.280Not only that, I published on Human Action.
00:03:34.680Or, I don't know, I wrote about the Manchester School.
00:03:38.180I even wrote about the little lone London school in that book.
00:03:45.900Economists, people have long forgotten, like, you know, Hutt and many others.
00:03:54.320We don't need to get into them at all.
00:03:59.060You know, so I was pretty, like, to say I was pretty into economics and free market economics would be an understatement.
00:04:06.660And I'm still a member of various free market groups, including the IEA here in London, which some people may have heard of.
00:04:17.780And I'm still friendly with the guys from the Music Institute as well.
00:04:21.020But I've always been a realist, first and foremost, Auron.
00:04:27.480And rather than an idealist or somebody who, like, stands for, like, some abstract ideal, like, freedom or something like that.
00:04:35.860And when you look at the real world and you look at the facts in front of you, it's very difficult to maintain.
00:04:41.440In fact, I think it's very difficult to maintain a kind of absolute free market position in the face of the reality we've all lived through in the past few years.
00:04:52.100And, I mean, I don't know if you want to go through these points one by one.
00:04:58.520But, I mean, you know, when we're in 20, it's 2023 now, when we're in this sort of era and you see guys from, you know, Reason Magazine or the Cato Institute or some other Koch Brothers funded think tank calling Ron DeSantis evil because he dared sanction Disney.
00:05:31.460These people are meant to be, like, this is what we're for now.
00:05:34.560We're for the rights of, like, massive public companies like Disney to just have carte blanche to do what they want to children.
00:05:44.700So I actually think that it's quite difficult to maintain that absolutist libertarian position in the just in the face of the reality that we live in.
00:05:58.780And what I'm hoping to do on this show is basically just to remind people of some of those things, regardless of if they're free marketeers or not, or they're conservatives, wherever they're coming from.
00:06:12.540I just think that we have to address the situation as it really is today.
00:06:20.940And I think one of the problems on our side in general is that far too many people just, they live on copium, you know, they just live on cope.
00:06:30.840And that's how they get through week to week, just telling themselves things that are lies to make themselves feel better.
00:06:39.400Meanwhile, things get worse every single year.
00:06:59.020Yeah, I'm glad that you went ahead and established kind of your bona fides there, because I was going to ask you to do that anyway.
00:07:05.480I think it's really important for people to understand that, you know, you are an academic, somebody who has been a professor, like you said, you've published papers and this kind of thing.
00:07:14.300And you have what I think is very fairly described as an expert level grasp of Austrian economics.
00:07:21.700So when you come at this, you're not some, I see some people, oh, you're a commie now, right?
00:07:25.940Like you're not some Marxist, you're not some radical, you know, leftist.
00:07:31.500You're not someone who just stumbled into this discipline from another one with absolutely no background.
00:07:38.300Like you said, you have a very good grasp and have been very firmly on that side.
00:07:42.460And I think one of the things I wanted to establish on this is this is a big problem I had with formalism, which is like Mitch's Smallbug's idea, right?
00:07:50.680I kept saying, why would you want things this way? And then it was it was one of the early NRX guys who helped me understand.
00:07:58.560He's like, he's not advocating for it. He's simply stating a fact of reality.
00:08:02.900And you sitting around and wanting your ideology to make it something else doesn't change the situation.
00:08:08.700I think this is a similar case with the free market. You're not here advocating for, you know, central government top down control of economics at every stage or something.
00:08:18.920You're simply noticing the facts on the ground and saying we can wish for a dream where the state is completely removed from the economic process.
00:08:28.440But in the real world, we never truly achieved that. Right.
00:08:33.220Yeah. I mean, I think the the line from Machiavelli is the one I would always point to.
00:08:40.040We write as the word, you know, we write about the world as it is, not how it ought to be.
00:08:46.060And I mean, you know, when we're facing the situation we are now, you know, having somebody just come up with like, oh, well, in an ideal world, there wouldn't be any, you know, corporations or in an ideal world, there wouldn't be any state doesn't actually help.
00:09:09.160It's just like, OK, you can you can be right in your head.
00:09:11.640This is something our buddy P. Quinona says quite often. Right.
00:09:15.100It's like, well, you can be right in theory.
00:09:18.140In the meantime, what's actually happening here?
00:09:22.500You know, so, yeah, I think it's if you're not facing reality, then you're not actually even in the right in the right game.
00:09:36.880Especially when our opponents, by which I mean the left or the radical left, if you want to put it that way.
00:09:46.760Now, you might you might think, hold on a second, academic Asian.
00:09:50.460These people don't live in reality. They don't know the difference between a man and a woman.
00:09:53.740Right. But in so much as they understand power, they do.
00:09:58.720They do live in reality. Right. And if the left understand one thing and one thing only, it is the nature of power and how to achieve objectives using power.
00:10:13.100And I mean, I don't want to I don't want to say that libertarianism has been like a side off or something like that.
00:10:22.280But but I do think that it's it's it's trying to fight with like two two hands behind your back while your opponent is like bringing guns.
00:10:32.240This is that's how I would describe it. You know, it's like you're not even bringing a knife to the fight.
00:10:38.400They've got bazookas on the other end and you're just kind of like literally standing there with your chin out ready to be punched.
00:10:52.680Well, and I think it's really important, you know, with with libertarian thing to say that as is so often the problem with so many of kind of these right wing ideas or, you know, in general, these ideas, it is the it's the maximization of the principles of problem.
00:11:09.940So you might have the fact that like and we'll get deeper into this, but you might have the fact that generally the government not constantly interfering with price signaling and everything else that comes through the market is a good idea for your country in general.
00:11:26.980It is a general good guideline for how you should run it. But the maximization and unilateral disarmament that the right turns this into, especially libertarians, is I think what makes it more more dangerous.
00:11:40.240But that said, let's let's go ahead and get into your points here.
00:11:44.140I'm going to we're going to run through these.
00:11:46.000I'm going to present some challenges I've heard other people bring so that you can kind of answer those properly and ask you some questions I have, because these are generally along my lines.
00:11:55.400I'm a more and less in agreement with a lot of these objections, but we'll kind of guide the discussion that way.
00:12:01.500So myths of the free market. The first one here is there's never been and can never be a state of affairs that is pre-political.
00:12:10.260As such, there will always be a set of rulers who will 10 times out of 10 intervene in the business and resources of resource allocation.
00:12:19.340You've got Moscow Pareto here. You could probably go ahead and stick Schmidt or.
00:12:25.680Yeah. And a point a point I didn't make in there regarding Schmidt in particular, I just didn't have room really to add it all in.
00:12:36.440Right. But Schmidt would say that it is the exception that is the thing of interest.
00:12:44.420That's right. Not the norm. Now, you can have a situation where the government does not usually get involved in certain things, but does get involved in the in the exception.
00:12:53.920OK, and everybody's mind will go to things like, I don't know, a famine occurs or I don't know.
00:13:02.380I mean, something like COVID-19, for example.
00:13:06.980Yeah, it's a really good example. Yes.
00:13:09.840And that's really where you where you can.
00:13:14.640See the system of power that is actually in place as opposed to the one that is theoretically in place.
00:13:22.280So that's just a little caveat I'd make there.
00:13:25.980Yeah. I mean, any any questions about that? Does anybody disagree with this idea that the human is the political animal and as such, there is no outside of power?
00:13:35.240There is there is always something approximating what we call the state.
00:13:40.040I think, though, the issue that people might come up with here would be something to the effect of, well, there is a yes, but there is this public private distinction.
00:13:48.940Now, both of us have talked a lot about this. So so I think we can both kind of we might dismiss it easily.
00:13:55.020But I think this is the objection a lot of people would come up with is, yeah, there is.
00:13:58.620But but the public and the private should be separate and the state should be bound and not enter into the market and involve itself with this.
00:14:09.240I mean, my general response would be, you know, how how naive do you have to be to believe that a group of people who have the monopoly on violence won't in some way involve themselves in manners of economy?
00:14:23.840But maybe you want to answer that a little more.
00:14:29.220Well, I mean, exactly what you said, Aaron.
00:14:34.300Well, how about like, you know, putting a needle in your arm or, you know, yes, you know, forcing forcing your children to go to school?
00:14:44.660I mean, nobody basically nobody has the right to not send their kids to school.
00:14:49.700It's been mandatory for over 100 years.
00:14:54.280I mean, this is this is one of those things that is now taken as being so normal that nobody really questions it.
00:14:59.620But once upon a time, it wasn't mandatory for kids to go to school.
00:15:03.720Yeah, it's it's really interesting how often people will just normalize massive expansions of the state and still pretend like there's this free market or or certain constitutional restrictions are still in place.
00:15:18.720Right. Like we still do this in America.
00:15:32.320You know, we just kind of continue to play this game.
00:15:34.600And so I think it's a good good to point out, like these areas in which the government has kind of captured this power.
00:15:40.540That power is assumed to be normal and natural.
00:15:43.220Conservatives will, of course, conserve that power.
00:15:45.500In fact, during COVID, they fought very aggressively to get their kids back into government mandated indoctrination centers as aggressively as possible, even though that is a representation of the government forcing its way into it should be a more free market type environment.
00:16:09.440The will of the stock market reflects neither the needs and wants of consumers nor the allocations of resources that reflect the underlying fundamental performances of the companies represented by equities.
00:16:22.700Yeah, I mean, there's a there's a fundamental disconnect between the stock market and the incentives of the stock market, much of which is based on speculation, frankly.
00:16:36.320And what we might describe as the real economy.
00:16:41.900And people actually experience this in all sorts of hidden ways.
00:16:45.880Like I remember there was a there was a much loved chain like shop in this country called Woolworths.
00:16:55.700I think that's a Woolworths in America as well.
00:17:21.620But what had happened is that some group of investors had bought the company and just saddled it with tons and tons of debt.
00:17:31.320And and then it defaulted on its debts and had to close down.
00:17:36.320You know, you can see how finances cause this like the financial world cause this store to shut.
00:17:45.180It was nothing at all to do with, you know, the people like buying and selling goods, consumer goods.
00:17:53.880And this is just one of many examples that you could give of the real economy and the financial economy having almost nothing to do with each other.
00:18:06.7802008 would be another classic example, I suppose.
00:18:09.620Now, I think a lot of people would probably come back to that and say, well, but that's an example of one aspect of a free market impacting another.
00:18:17.980That's not an aspect of the government.
00:18:28.820So let's just move on to that one and then we can kind of tackle that whole issue together.
00:18:32.580So number three here says the public company created by the IPO is a product of law, not of free market transactions, and is therefore a function of the state.
00:18:44.720The private public distinction is lost as soon as this takes place.
00:18:49.360Yeah, and that's in a book called Nemesis by C.A. Bond.
00:18:55.680Good luck getting hold of that one, by the way.
00:19:03.660So, I mean, this is something that's often not grass, but as soon as a company floats itself and goes public, you know, anybody can buy shares, you know, stocks in this company now.
00:19:19.600It is subject to a whole lot of rules and regulations that a private company is not subject to.
00:19:27.260And it's subject to managerial oversight as well, which we'll get on to.
00:19:34.880This is actually the, how can I put it?
00:19:41.560You have a book coming out, Aaron, called The Total State, right?
00:19:44.940I have talked about, I have also talked at other times about something I call the octopus, which is this kind of interconnected leviathan.
00:19:54.900But I think Total State gets the idea across pretty well.
00:19:58.460Essentially, what happens when a company goes public is that it is more or less formally joining the total state under law.
00:20:10.320There's also a whole set of, I mean, regulations that dictates who it is who can issue those bonds.
00:20:22.980It's typically done by an investment bank, you know, Goldman Sachs or JP Morgan or one of these kind of massive investment banks.
00:20:32.200Do you think, like, if you and I really wanted to get together, we could set up, like, a right-wing investment bank?
00:20:40.860No, it would be immediately raided, yeah.
00:20:43.920Just set up your own JP Morgan, you know?
00:20:47.020Maybe once upon a time that would have been possible, but it's basically, you know, there are 10 of these massive ones, you know, in Germany, there's Deutsche Bank, there's UBS, I think it's on the continent as well, you know, Morgan Stanley, Bank of America, Maryland.
00:21:11.920I mean, there's just Barclays, Barcap is another one, Barclays Capital, and if you have a look on the books, they're basically just the same banks as they've been for the last hundred years.
00:21:23.880I don't know when the last established investment bank was, but this is the mechanism through which companies, you know, get listed as IPOs.
00:21:36.820So, it is also the mechanism through which, for example, the Federal Reserve or the Bank of England may release bonds onto the, you know, onto the market.
00:21:52.240That's another one of the jobs that they do.
00:21:55.580Do you remember all that stuff about QI?
00:22:43.920Dodd-Dodd-Frank or something like that.
00:22:45.680But what these do is they basically say, well, if you're Goldman Sachs, you have to hold a certain amount of money as, you know, this sort of asset.
00:22:57.680Another, you know, another percentage has to be held as this sort of asset.
00:23:02.100And they basically tell them, well, a certain percentage of that has to be U.S. Treasury bonds, for example.
00:23:08.320Or in this country, it would be a certain percentage has to be gilts, for example.
00:23:12.580Right. So, you can see how there's actually quite a lot of constraints on what investment banks can do.
00:23:21.440You know, I say it's difficult to say how independent the investment bank is from broadly what you'd call power.
00:23:50.080And right before we move on here with the fourth point, I just want to point out something I want people to keep in mind as they're going through this is the aspect of massification, right?
00:24:00.420A lot of this is, and we're going to get to it because you kind of have several points that overlap this in your list of 12.
00:24:09.240But the fact that all of these organizations have grown so large and they have such a grasp of control on their markets that the only way to be competitive is to basically join yourself to the state.
00:24:24.700There is no way to generate the kind of capital, generate the kind of investments necessarily, get through the regulations, comply properly, all these things, unless you are basically part and parcel with the state.
00:24:37.760And so, I think this is the first point that kind of makes that, but we're going to see that kind of work its way through many of these.
00:24:45.880It's also worth asking the question, like, why would anybody become an IPO if they give up all this power of control just by listening to themselves, right?
00:24:57.000Why would somebody like Elon Musk do it, for example?
00:25:00.820But that is the only way you're going to generate billions upon billions of dollars of capital.
00:25:07.760That's necessary to break in those markets, yeah.
00:25:12.720Yes, you can get so far with private investments or sometimes you can get state-backed grants as well.
00:25:21.800You know, I know the Tory party in this country are fond of, you know, giving backing to new firms, new startups and things like that.
00:25:29.740But at a certain point, the only way to go to the next level, to go from being a kind of exciting new firm to, you know, one who's able to expand massively is by going public.
00:25:49.140And an interesting example of where this actually went a little bit wrong is Twitter, speaking of Elon Musk.
00:25:57.280Twitter under Jack Dorsey, as I understand it, went public.
00:26:02.140I mean, they never turned a profit, which we'll get onto in a second.
00:26:12.460Like, that's why, I mean, yes, based Elon Musk for firing all the leftists and all that, but there was actually like a real business reason to do it as well.
00:26:21.840Dorsey just hired way, way too many people.
00:26:28.340There was loads of functions and things.
00:26:30.440And the company didn't actually make any money at any point.
00:26:32.940Yeah, Musk fires 80% of the, of the staff, you know, all of blue check Twitter is saying their goodbyes because obviously Twitter will shut down tomorrow.
00:26:42.260It's impossible for it to operate without these people.
00:26:44.820And it's been running just fine since.
00:26:47.080So, so, so in a strange way, Musk is one of the few cases where we've seen this happen in reverse, right?
00:26:54.020Musk has taken Twitter from being a public company back into being a private company under what we might call executive entrepreneurial control.
00:27:09.960And as we'll get on to, Musk still has a vulnerability because his biggest company and the one that has made him the world's second richest man or up until a couple of weeks ago, he was the first richest man, right?
00:27:25.040He has a vulnerability because that is a public company, Tesla, right?
00:28:42.300So number four is very interesting because I've heard a couple of different people push back about this one.
00:28:47.700So we'll probably spend a little bit of time with it.
00:28:49.600Mass shareholders lose functional control over companies to the managerial class, according to the Iron Law of Oligarchy.
00:28:56.600The organization is oligarchy, McHale's, who no longer run it for profit, but rather for the expansion of managerial power.
00:29:07.720Now, this is something that both you and I have talked about.
00:29:10.180This is a key aspect of James Burnham's work.
00:29:12.480And it's a big issue as to, you know, this is part of the third law of Robert Conquest's laws of politics.
00:29:23.820And so this is something that's really central to a lot of things we've talked about.
00:29:27.160But the people who I've heard challenge this idea, the managers wrest control of the company away.
00:29:33.680I've heard people like Tho Bishop come up against this.
00:29:36.980I've also heard actually Moldbug himself, you know, Curtis Yarvin said that actually Burnham's worst book is the managerial revolution.
00:29:45.080And he doesn't believe that the managers ever wrest control away from the CEO.
00:29:50.420So what would you say to people who say this is bad analysis, the CEO or the owners at the end of the day always actually control the company?
00:29:57.240Well, the first thing I'd say is that the CEO, in many cases, is a manager.
00:30:21.920Another example would be, I don't know, like back when he was alive, Henry Ford or Vince McMahon for many, many years was the man, right, who ran WWE wrestling.
00:31:03.960It is whether the person is essentially a kind of monarch within the company who owns it outright and has the final say on things and the CEO who himself could be hired and fired.
00:31:21.020And, I mean, when a company becomes public in this way, they have to, by law, appoint a board of governors who are responsible for reviewing the executive board.
00:31:39.860I don't want to get into the weeds too much, but you're familiar with this process, right?
00:31:43.540There's a board of governors who are typically people from other companies or professionals, you know, who don't actually work for, you know, whatever the company is.
00:32:39.000It's actually responsible for a scary amount of, like, U.S. security and cybersecurity and stuff like that.
00:32:46.720I mean, Peter Thiel is just an incredibly powerful guy.
00:32:49.960But, like, for example, Peter Thiel is clever, and he's made it so he's effectively irreplaceable in that company.
00:33:01.560Like, he's got, like, he's made it so that his votes, for example, on Magic, he can, like, if it was put to the vote, oh, let's get rid of Peter Thiel.
00:33:13.580He could just kind of veto it with his, like, magic votes.
00:33:17.280And there's certain other things, like, within the terms and conditions, it's like, oh, you can't actually, like, replace the CEO and things like that.
00:33:31.080And there's all sorts of other weird things, like his technical pay is zero and things like that.
00:33:38.800I mean, Malberg may have stuff like that in mind, given that he's kind of in with that set, right?
00:33:44.000He's probably seen, probably talked to Peter Thiel, and he's like, and Peter Thiel's like, yeah, well, that's bollocks because look at the what I've done type thing.
00:34:25.480I mean, you know, Henry Ford was conservative.
00:34:28.100The Ford Foundation are the biggest, one of the biggest founder, funders of LGBT activism and left wing activism in the country and have been since the 1960s.
00:34:40.120As an example, I'm just showing how ownership and control aren't the same thing.
00:34:46.300And as soon as you allow the managers in, it's only a matter of time until control is wrested away from the original owner.
00:35:00.260Even somebody as a control, you know, a control freak like Vince has still managed to lose control of his own company within his life, within his lifetime.
00:35:12.380You know, they got him through a sex scandal.
00:35:14.800And because the WWE is a public company now, they have all sorts of oversight that, you know, he just can't get away with it.
00:35:22.140He used to when it when it was his when it was just his.
00:35:24.620So now somebody else is running things there.
00:35:30.520And I mean, you know, let's just say, do you think it's going to say it's true to his values or is it going to get more woke?
00:35:38.180Is it going to get more politically correct?
00:35:40.320Is it going to come in line with the rest of the culture?
00:35:44.020It's going to return to room temperature as soon as it's the hand of a decisive individual is off the leadership of the company.
00:35:50.720Right. And in fact, if people read the populist illusion, I actually give many cases of the actual founder owner of a company being fired.
00:36:02.040I mean, the famous one was Papa John's Pizza, right?
00:36:09.320He's not like some random guy who operated the company that no one knew.
00:36:12.840It's named after he's on all of the commercials.
00:36:16.880Like he's the guy on the side of the box.
00:36:18.480Like he's the guy in the way that Colonel Sanders, you know, was Kentucky fried chicken and he got fired.
00:36:24.680Yeah. So there are there are lots of examples like that.
00:36:28.660I mean, you know, you can pick your own ones because there's there's literally hundreds to choose from.
00:36:34.560So so I would I would I would say, yes, there are loopholes that somebody really clever like Peter Thiel would know how to leverage.
00:36:42.800So one of the really funny things about that report I did is that under California law, you have to have a woman as one of your board members.
00:36:54.300Peter Thiel just like has some random journalist on there who wrote a book about him.
00:36:59.120I was hoping you were going to say that he changed his gender identity to meet the standards.
00:37:04.400But yeah, no, that's that's the other.
00:37:05.860I mean, what I'm saying is he's got like he's just got like a lackey who has no business acumen, no business history.
00:37:13.520No, like I mean, usually if you're a if you sit on the board of governors, you have to have like a 20 year career as a C level executive or something like that.
00:37:22.820But he's just like stuck flunkies on there just make it the most affirmative action higher possible.
00:38:25.680I mean, it's not I mean, you can see with a lot of the decisions they make, it's not for profit, although that there is a there is a bottom line when it comes to diversity.
00:38:39.300There is a financial reason to do it, because, of course, they get sued by anybody in America who claims discrimination.
00:38:46.920That's an automatic lawsuit. I mean, I think the famous case was when those two homeless guys were like sitting in Starbucks.
00:38:57.800Yes. Yeah. And I mean, that was a lawsuit.
00:39:00.480Yeah. Right. So so there there there is a money factor there.
00:39:05.800But it's not it's not it's not only that right there are you have to look at the incentive of the manager on the ground.
00:39:15.880And I think anybody who's ever worked in a big company, I'm talking like a kind of, you know, blue chip company, I guess you'd call it, would would know of entire departments and divisions that exist for their own expansion, not for bottom line profit.
00:39:34.520Right. Well, and and I think it was Mike of Imperium Press who did the the video making a really interesting point about diversity inclusion departments as regulatory capture.
00:39:45.640Right. Like most people are familiar with the concept of regulatory capture.
00:39:48.960I think the idea that that big companies actually want a number of regulations because small companies can't keep pace.
00:39:55.100And that means that they can't actually like be upstart competitors and the big companies have a massive advantage.
00:40:00.460So they're fine with the government regulation because they can comply.
00:40:03.580And that's also true of diversity, equity and inclusion.
00:40:06.800If you have to have X number of people of different races or, you know, gender ideology or whatever on your board or in positions of power, your company.
00:40:15.700And there are only only so many people actually capable of, you know, doing that job in those specific demographics than being the large company that can hoover up those people and staff those positions creates a form of regulatory capture for your company.
00:40:31.660Yeah, there's a guy in the chat saying the FCC will not issue a license unless 33 percent of your employees are minorities.
00:41:23.000So people do, I mean, quite literally get away with murder in many cases under this limited liability law, which is also, by the way, a legal, a legal fiction.
00:41:34.080You know, it's a function of the state.
00:41:38.860In addition, massive asset management firms like BlackRock, Vanguard, State Street are now so large that they can dictate the market for any given share to the effective control of institutional investors across every sector and indirect control through the waves and ripples any movement they make will create for the rest of the market.
00:41:58.360Yeah, I mean, BlackRock and Vanguard and State Street, if you ever want to have some fun, right, click on any company you can think of and have a look who their largest, who their largest shareholders are.
00:42:18.940And pretty much any company, and I'm talking about the big blue chip brand name ones now, right, the S&P 500 type firms, will be 3% to 4% owned by BlackRock, Vanguard, and or State Street.
00:42:34.960Also, BlackRock are the largest shareholders of State Street as well.
00:42:43.640And then you can have a look, well, let's say Coca-Cola as an example, which are 3% to 4% owned by each one of these.
00:42:54.720You can then have a look at Coca-Cola's own kind of investment wing, because there's like a Coca-Cola investment, because they have to invest their money.
00:43:04.120And they will also be like a 1% or 2%.
00:43:06.020So they all kind of, every company owns each other, right?
00:43:39.140And, I mean, speaking of algorithms, there's also this thing called Aladdin, which is a kind of investment platform software thing that BlackRock made its name, selling.
00:43:55.900And Aladdin, as I understand it, isn't a kind of neutral platform, where it kind of makes little helpful suggestions.
00:44:05.560Have you considered investing in Tesla?
00:44:09.280Gives you good ESG points or whatever it is, you know.
00:45:38.640I mean, let the market decide, but no.
00:45:40.660I think you'd quickly see a movement on those shares, and you'd see a massive crash in the share price of whatever firm that happened to be.
00:45:50.920Regardless of how many trainers they're selling, or whatever it is they sell, right?
00:45:57.860You know, it would be the Kanye Westization, if you want, of that company, just at that kind of level.
00:46:05.700So, I mean, okay, I'm making an extreme point just to illustrate the fact that, you know, there is power held in these firms.
00:46:16.040One of the things I would recommend people doing is to make a habit of reading Larry Fink's letter to the CEOs.
00:46:45.040It's not like, I mean, remember, this guy is meant to be just an asset manager looking after your wealth, you know, making money for people who have pensions and things like that.
00:47:33.320But the implicit threat is, listen, buddy, if you're not on board, either one, you know, if you're a hired CEO, you'll be fired or whatever.
00:47:42.000Or two, you know, if you don't get on board, we're going to ensure that you're no longer in the top 10 or top 100 or whatever it is.
00:47:55.080And I think we're actually seeing a little bit of that now with Tesla.
00:48:00.500Tesla's, I mean, since I've been following Elon Musk, I cannot help but notice that every day Tesla's price is going down.
00:48:15.300What happened for Tesla's price to come down now?
00:48:20.120Well, this works well into number seven here.
00:48:23.020Because speaking of those incentives and the need to get in line, I think a lot more people are familiar with this now than they were just a few years ago.
00:48:30.620But you have, through these mechanisms and even attempts to formalize them, like ESG, managers can inflate stocks for bogus companies who create zero real value.
00:48:41.060I think the green sector, 87% of Silicon Valley firms never see a profit.
00:48:47.500Yep, their share prices have been great inflated over a decade.
00:48:50.840It's driven by ideology, not what the customers want.
00:48:54.420So these companies, like Tesla, might be on the upswing when they're, you know, conforming with ESG and they've got the buzz around, you know, they're in the right ideological quadrant of politics and everything.
00:49:08.540And so they can get hyped up, they can get expanded to even companies that don't actually produce anything valuable can get this hype and this inflation.
00:49:18.040But then they can artificially be reduced if they're no longer kind of on board with the ideology.
00:49:22.700Yeah, and the weird thing about this is that if you ever see how these kind of equities valuations are done, you know, I mean, we're talking like really, really complex sums and spreadsheets and things.
00:49:36.560But effectively, they're all based on like 10 and 15 year projections.
00:49:40.940There's like this company that's been around since 2008.
00:49:44.380In the year 2035, they'll probably start making a lot of money.
00:49:49.820If you want to make a real return, you need to get in quick on whatever that company happens to be, right?
00:49:57.940And there, I mean, one of the other interesting things you could do, you can have a look at, I think it's Forbes or Fortune is one of those.
00:50:07.240But they release a rich list every year, right?
00:50:25.840How much money do they make every year?
00:50:27.540And you'll come across loads of people who are multi, multi-billionaires who've never, whose companies have never actually made a dime, not even like one penny in the past decade.
00:50:39.980I mean, to me, this is an insane situation.
00:51:10.460Number eight, on top of this, managers in government, see the Fed and central banks, can work with managers in finance, see BlackRock and Vanguard, to topple any rogue CEO, see current Tesla stock prices, or even any rogue government, see Bank of England plus market versus Liz Trust.
00:51:28.840So you've already talked about this a little bit.
00:51:30.960But yeah, the finance and government managers can coordinate to check out anyone who isn't properly playing the game, right?
00:51:54.540But, you know, I mean, there are a few other pieces to that jigsaw.
00:52:02.800But, you know, oh, the sky was falling in.
00:52:06.140But the reason that happened is because, remember those market signals?
00:52:11.560The Bank of England made a statement, counter-signaling the Chancellor of the Exchequer, created a run-on guilt.
00:52:18.440And, you know, the market is going to respond.
00:52:21.680Like, if the Bank of England makes a statement, the market will respond, right?
00:52:26.520Or if Larry Fink makes a statement, the market will respond.
00:52:30.440Or if the chairman of the Fed makes a statement, the market will respond.
00:52:34.940So you can see that there are these pieces of the machine or the pieces of the total state, if you want, that can, in a strange way, remove other pieces that aren't playing exactly the ball they want.
00:52:55.160You know, Liz Truss was not like some kind of, this wasn't like appointing Anne Rand as prime minister or something like that, right?
00:53:04.100This is just kind of like a, you know, a slightly thick, bog-standard Tory, you know, Tory.
00:53:13.200But for whatever reason, the system wanted Rishi Sunak in power.
00:53:19.360And so, you know, what happened, happened.
00:53:25.180So, yeah, and currently we're seeing Tesla stock price, which has, I mean, Tesla's a really interesting example because I think, and forgive me if there are any Tesla stands in the audience or whatever, I think that nobody really wants electronic cars out on, right?
00:53:43.860This is just like a, this is like a kind of bullshit product, to be frank.
00:53:54.960You can make them as cool as you want.
00:53:56.780You can put video games in a Tesla for anybody cares, but it's still, it's still not really something that people, people in the heart of heart wants.
00:54:05.560It is, it's being driven by an agenda, a green agenda.
00:54:10.700And I think this partly accounts for Elon Musk's enormous wealth because the stock price of Tesla has been artificially pushed through the roof because this has to be the next best thing.
00:54:22.560Why does it have to be the next, the next big thing?
00:54:27.260Because everybody says so, because we have to reach net zero carbon or whatever.
00:54:31.880So, in a strange way, Musk has ridden that grift for many years.
00:54:37.400Now he's become enemy rather than friend.
00:54:40.120And all of a sudden, oh, surprise, surprise.
00:54:44.580They don't really care about electric cars that much.
00:54:46.700I think Joe Biden even said like, oh, I really care about the environment, but not enough to drive a Tesla.
00:54:54.780Well, I think what's really interesting about the Tesla market is it feels like it's almost, and this is just anecdotal, I don't have any data or anything on this, but it feels like it's driven almost entirely by upper middle class climbers.
00:55:07.700Like it's been sold as a status symbol to people who want to signal that they're on the ascent and they're like with the ruling ideology.
00:55:43.800I mean, that's why the meme where everyone was like, well, you know, like Pete Buttigieg being like, well, isn't it great that the price of gas will go up because then everyone will have to buy a Tesla.
00:55:52.480It's like, well, not everybody makes 50 grand, Pete.
00:55:55.180Or not everyone makes enough to buy a 50 grand car this year, Pete.
00:55:58.480So actually, like the vast majority of people are just taking a big L on your higher gas prices.
00:56:03.920And so I think that's the thing is there's only so much of a market for this.
00:57:05.980What I suspect will happen, I don't want it to happen, but what I suspect will happen is that Tesla will be the mechanism through which the total state disciplines Musk.
00:57:17.160Musk is interesting, though, because like Thiel, he's quite in with what people call the deep state, like the security apparatus and things like that through SpaceX.
00:57:32.360So those two guys in particular have done an interesting job of kind of making themselves curiously indispensable to the deep state.
00:57:43.020So he has some leverage the other way, right?
00:57:47.160But I still think they'll try to discipline him through Tesla.
00:57:51.340Yeah, well, Starlink is another aspect of this, right?
00:57:53.400They needed Internet in Ukraine, so they needed Musk to deploy Starlink there.
00:57:59.740So, yeah, I think there are interesting – a lot of people will get on to Musk, and understandably so, for kind of being in bed with the state.
00:58:07.900But there is the other – there's the flip of that where, as you're pointing out, it could be a strategy of making yourself indispensable so that there's less pressure the state can immediately put on you without endangering its own operations.
00:58:21.360Yeah, although if push comes to shove, I don't know why they just wouldn't say, yeah, we're going to nationalize it.
00:58:30.240All right, so number nine, the iron law of oligarchy extends also to the consumer level.
00:58:35.180It's not the consumers who are sovereign, but the purchasing managers of a supermarket who dictate which goods they see on the shelves and which one they don't.
00:58:46.980Even if there are massive market demand for, say, Alex Jones, the Apple supermarket is not going to allow it on their shelves.
00:58:54.300But it's the same with any consumer good.
00:58:57.380Yeah, so this is really important, right?
00:58:59.080The people who actually get to curate the marketplace, and especially, again, as these marketplaces centralize, as everyone gets used to getting their podcast through Apple and everyone gets used to watching their video on YouTube and not willing to go somewhere else,
00:59:15.540these platforms who get to curate who's on there and who's not have a massive amount of control.
00:59:21.720So even if you think you have a free market, you might end up getting a lot more Lex Friedman commercials on your YouTube than you will Alex Jones, right?
00:59:32.780Well, Alex Jones will be banned, for one.
00:59:45.220It's like brands of sausages or soft drinks or whatever it happens to be.
00:59:50.380What the consumer actually sees is curated.
00:59:56.360One of the best places you can see this is in, if you ever go through a supermarket, have a look at the books on the shelf that's being sold in the supermarket, right?
01:00:07.380I mean, are they the books that everybody wants?
01:01:18.680Please go in depth a little bit on this because I love your spiel on this.
01:01:22.040Well, I mean, some – I mean, let's face it.
01:01:26.720There would be some purchasing manager, probably a fat woman, okay, who is in charge of procurement for a supermarket, what new products get on the shelves, okay?
01:01:40.120She will be given a KPI that is, you know, her boss, her manager will tell her, listen, you have now written into your contract, we have to be net carbon zero compliant by this time.
01:01:57.900And your KPI is dependent on us reaching this target, okay?
01:02:02.680Now, also, by the way, we've set you up with a meeting with Beyond Meat, who tick all these boxes.
01:02:11.900Like, if you're that procurement manager, regardless of how many people actually want Beyond Meat, are you going to give it a place on the shelf?
01:02:22.000And the fact of the matter is, is that every single supermarket went big on Beyond Meat.
01:02:27.120And not only that, McDonald's, Burger King, they all went big on Beyond Meat plant-based burgers.
01:02:36.580And they put it as number one on their menu.
01:02:40.160I don't know if that's still the case, but at one point, if you went to McDonald's and you went on the electronic menu that's replaced real workers, it was the first one.
01:02:48.760It'd be like, have a plant, have a muck plant.
01:02:52.300Or you could have a Big Mac or all the other things, but it put it as number one.
01:02:55.680So that's a little nudge technique there.
01:02:58.820And what was incredible is that during the pandemic, when food was running out and people, you remember where people were panic buying and things like that?
01:03:09.340Even during all of that, nobody touched the Beyond Meat burgers.
01:03:15.640There were empty shelves, no fruit, no veg, but nobody would touch it.
01:03:21.560Even at reduced price, nobody would touch the Beyond Meat stuff.
01:03:26.320And that is actually one area where the total state seems to have taken an L.
01:03:32.680Because if you look at the Beyond Meat stock price now, it is crashing and burning.
01:03:37.080And even Bill Gates came out and said, look, guys, this hasn't worked.
01:03:45.500So we're going to have to go back to the ruling board.
01:03:47.660And if Bill Gates is saying that, you're pretty much screwed.
01:03:50.080So I live in Florida, and of course, we get hurricanes pretty regularly.
01:03:56.380And one of the amazing things is even when the hurricanes are coming through and all of the shelves are completely empty because everyone's buying food for the next few weeks because who knows if they're going to have power or anything like this.
01:04:09.200There's always one thing left on the shelf every time.
01:04:12.320There's one thing that no one, no matter how desperate they are, never buys.